Borsa Istanbul analysis drawing Bloomberg’s attention: It’s moving away from normality

Srinivasan Sivabalan, Senior Emerging Markets Editor at Bloomberg, wrote about stock market developments after the earthquake in Turkey.

Borsa İstanbul receded sharply after the earthquakes centered on Kahramanmaraş and remained closed for a week afterward. After a week-long hiatus, Borsa İstanbul reopened with a series of interventions and demonstrations.

Some of these measures paved the way for private pension funds to invest in shares and encouraged share buybacks.

‘DIVERSE FROM NORMAL’

Bloomberg, who wrote an article on the subject, claimed that Turkey has moved one step further away from normalcy in the financial world due to government intervention in the stock market. Recalling that foreign investors have moved away from the stock market in recent years, Sivabalan made the following statements in his analysis:

“Before last week, the stock market was one of the last economic pillars of Turkey, largely independent of the political aspirations of the state. This is not the case. The government pumped cash into the stock market with a series of quick swings and engineered a $20 billion rally in the BIST 100 Index. On paper, the BIST 100 Index is still close to its all-time high, but in reality, Turkey has moved one step further away from the normal financial world.

Investors around the world say they don’t want to invest in an exchange where the rules change depending on who is in power. However, it is difficult to know if the maneuvers were temporary measures taken during the crisis or a political conjuncture. President Recep Tayyip Erdoğan is trying to keep asset prices high ahead of the May elections.”

EXPERTS ARE CONCERNED

Expert opinions on the subject were also included in the analysis. According to pessimistic investors, the changes in the stock market are interpreted as the expansion of government control that has already reached the depths of Turkey’s currency and bond markets. According to international investors, Turkey’s stock market changes increased the risk of turning the country into a closed market.

“There is no market anymore,” said Wolfango Piccoli, co-chairman of Teneo Intelligence. “It’s about short-term political goals and the relentless involvement of local authorities, who use all kinds of tricks to give an image of normalcy,” he said.

According to Nick Stadtmiller, chief executive of New York-based Medley Global Advisors, it seems difficult to keep the stock market high with continued government intervention. “The problem is that the stock market almost certainly needs further buying to stay high,” Stadtmiller said. “Policies must continue to intervene to prevent a stock market crash that would hurt consumer confidence and spending.”

‘A TEMPORARY SITUATION’

Some investors think that the situation is temporary. Bank Julius Baer equity strategist Nenad Dinic said: “The near-term measures taken to rebalance market volatility and reduce volatility in the wake of the tragic earthquake seem mostly justified. We see little risk of unintended policy intervention,” he said.

Mobius Capital Partners portfolio manager Carlos Hardenberg, on the other hand, said he has Turkish stocks and is waiting for the election. “We have also seen this in other countries, and the measures taken are temporary,” Hardenberg said. The authorities should stay away from the market in general, as this could result in a loss of confidence,” he said.